How does third-party payment distort the market for health care? If it is so distorted why does every wealthy country insist on using third-party intermediaries to purchase health care? Why do we carve out a separate payment program for our elder citizens?
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Introduction:
The question focuses on the impact of third-party payment on the market for healthcare. It also raises concerns about the use of third-party intermediaries by wealthy countries and the provision of a separate payment program for elder citizens.
Answer:
Third-party payment in the healthcare market can distort the pricing and resource allocation mechanisms. Insurance companies, government programs, and corporate employers may negotiate prices that do not reflect the actual cost of care, or providers may overutilize services to maximize revenue. In addition, healthcare consumers may not have the necessary incentives to compare prices and quality, leading to moral hazards and inefficient allocation of resources.
Despite its drawbacks, most wealthy countries use third-party intermediaries to purchase healthcare for their citizens. This is because governments can negotiate lower prices for medical supplies, technology, and pharmaceuticals when purchasing in bulk, and they can provide coverage to uninsured or under-insured individuals. Moreover, centralized payment systems can promote improved health outcomes and cost containment measures through regulation and oversight.
The separate payment program for elder citizens in the United States was established under the Medicare program. It provides critical coverage for seniors that may not otherwise afford comprehensive healthcare services. The program is financed by contributions from payroll taxes and premiums and is administered by the government. The use of a separate payment program allows seniors access to healthcare services that they may require more frequently due to their age and underlying health conditions.
In conclusion, third-party payment for healthcare can be problematic, but it remains a critical component of healthcare systems in most industrialized nations. The separate payment program for elder citizens is necessary to ensure access to healthcare services for a vulnerable population group.